New South Wales Supreme Court CITATION : Khouri v National Australia Bank Ltd [2007] NSWSC 987 HEARING DATE(S) : 23/08/07 JUDGMENT OF : Gzell J EX TEMPORE JUDGMENT DATE : 23 August 2007 DECISION : Leave required. Leave granted to withdraw admission. No order as to costs. CATCHWORDS : PROCEDURE - Miscellanous procedural matters - Amendments - Application to amend statement of claim to withdraw an admission - Whether leave required under the Uniform Civil Procedure Rules 2005, r 12(6) - Solicitor drew statement of claim in the mistaken view that if an unfair mortgage by one bank was refinanced by another bank, the refinancing bank must be given credit for the unfair loan - Whether the admission should be withdrawn - Matter not set down for trial LEGISLATION CITED : Uniform Civil Procedure Rules 2005 Contracts Review Act 1980 Mizzi v Reliance Financial Services Pty Ltd & Ors [2007] NSWSC 37 St George Bank Ltd v Trimarchi [2003] NSWSC 151 Drabsch v Switzerland General Insurance Co Ltd, NSWSC, unreported, 16 October 1996 Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738 CASES CITED : Maile v Rafiq [2005] NSWCA 410 SLE Worldwide v WGB & Ors [2005] NSWSC 816 Queensland v JL Holdings Pty Ltd (1996-1997) 189 CLR 146 Ridolfi v Rigato Farms Pty Ltd (2001) 2 Qd R 455 Read v McEwen & Anor [2007] NSWSC 825 Awatef Khouri - First Plaintiff PARTIES : Fred Khouri - Second Plaintiff National Australia Bank Ltd - Defendant FILE NUMBER(S) : SC 5648/06 COUNSEL : Mr P W Young - Plaintiffs Mr J M White - Defendant SOLICITORS : Bransgroves Lawyers - Plaintiffs Dibbs Abbott Stillman - Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J THURSDAY 23 AUGUST 2007 5648/06 AWATEF KHOURI & ANOR v NATIONAL AUSTRALIA BANK LTD EX TEMPORE JUDGMENT 1 An application was made for leave to amend the statement of claim by deleting a paragraph. Materially for present purposes, the Uniform Civil Procedure Rules 2005 r 12(6) provides: "(1) A party raising any matter in a defence or subsequent pleading may withdraw the matter at any time. (2) Despite subrule (1), a party may not withdraw any admission, or any other matter that operates for the benefit of another party, except with the consent of the other party or by leave of the court." The defendant did not consent to the amendment. It was submitted on behalf of the plaintiffs that leave was not required under subrule (2) because it was to be read in conjunction with subrule (1) and that subrule was limited to matters in defences or subsequent pleadings and did not apply to any matter in a statement of claim. 2 I do not read the Uniform Civil Procedure Rules 2005 r 12(6)(2) so selectively. It is stated in general terms with respect to any admission and, in my view, leave is required to amend the statement of claim to withdraw the admission of benefit under the original mortgage. 3 The basis for seeking leave to amend is set out in an affidavit of Matthew Bransgrove. He said at the time the proceedings were commenced it was his understanding, based on Mizzi v Reliance Financial Services Pty Ltd & Ors [2007] NSWSC 37, that if there was a previous unjust loan that was refinanced, the new lender would have to be given credit for the unjust loan. He had not, at the time he drafted the original statement of claim, read the decision in St George Bank Ltd v Trimarchi [2003] NSWSC 151. 4 Mr Bransgrove advised his clients that, in his opinion, it was inappropriate to join two banks and his clients accepted his advice to proceed only against the National Australia Bank Ltd. 5 In the course of preparing a paper that he was to deliver with respect to the Contracts Review Act 1980, Mr Bransgrove became aware of the decision in Trimarchi and that the plaintiffs did not have to give credit for the Australia & New Zealand Banking Group Ltd mortgage. 6 He said that had he read the decision in Trimarchi prior to drafting the original statement of claim he would not have inserted the paragraph giving credit for the ANZ loan. 7 Mr Bransgrove gave oral evidence and was cross-examined. In cross-examination he said he was mistaken about Mizzi. It was a decision subsequent to the commencement of these proceedings. But he maintained his belief that it was necessary, in the absence of joining the earlier mortgagee, to give credit with respect to moneys advanced under the first mortgage and it was that mistake of his that led to the making of the admission to which I have referred. 8 Notwithstanding that the only explanation given in the affidavit was reliance on authority, which could not have been so, Mr Bransgrove was clearly mistaken as to the law and upon the basis of that mistake he drafted the admission that was made in the original statement of claim. 9 The leading authority on withdrawal of an admission is the decision of Santow J in Drabsch v Switzerland General Insurance Co Ltd, NSWSC, unreported, 16 October 1996, at 7-8. His Honour observed that where a party under no apparent disability makes a clear and distinct admission that is accepted by its opponent and acted upon, for reasons of policy and due conduct of the business of the court, an application to withdraw the admission, especially at appeal, should not be granted freely. For this proposition reference was made to Coopers Brewery Ltd v Panfida Foods Ltd (1992) 26 NSWLR 738. 10 His Honour went on to say that the question was one for the reviewing judge to consider in the context of each particular appeal, with the general guideline being that the person seeking on a review to withdraw a concession made should provide some good reason why the judge should disturb what was previously common ground or conceded. 11 In Maile v Rafiq [2005] NSWCA 410 at 76, the Court of Appeal referred to the need for an explanation for the making of the admission that must be a sensible one based on evidence of a solid and substantial character. 12 In Drabsch, Santow J gave some examples. His Honour said that it was usually appropriate to grant leave to withdraw an admission where it was shown that the admission was contrary to the actual facts, or made inadvertently without due consideration of material matters. Leave might be refused where the other party had changed its position in reliance on the admission. 13 A review of the decision was made by White J in SLE Worldwide v WGB & Ors [2005] NSWSC 816 at 13-14 [55]-[56]. His Honour said that the principles enunciated by Santow J remained a correct statement of the law after the High Court decision in Queensland v JL Holdings Pty Ltd (1996-1997) 189 CLR 146. 14 In Ridolfi v Rigato Farms Pty Ltd (2001) 2 Qd R 455, the Queensland Court of Appeal considered an application to withdraw a deemed admission arising from the failure to dispute a fact in a notice to admit facts. The court said there was no principle that admissions made or deemed to have been made might always be withdrawn subject to payment of costs. The discretion was broad and unfettered. 15 I had reason to consider the decisions on this topic in Read v McEwen & Anor [2007] NSWSC 825. 16 NAB submitted that it will be prejudiced if the application is granted, in two respects. First, it will be difficult for the bank to obtain information in relation to the earlier mortgage and the allegation that it was unfair. Secondly, the plaintiffs have made clear to the bank that subrogation does not confer rights not enjoyed by the person who is paid out. Hence, should the ANZ mortgage be set aside, NAB would not be entitled to recover from the plaintiffs the amount it paid to ANZ. 17 The application is brought at an early stage in the proceedings, certainly not on appeal and certainly not just before the hearing. There has been no setting down of this matter for trial and there is, therefore, ample time for proper investigation to be made by NAB with respect to the fairness or otherwise of the ANZ mortgage. 18 It seems to me that this was a situation in which the concession was made without due consideration of the appropriate principles of law and was made inadvertently in that sense. In my view the situation falls within the example given by Santow J in Drabsch where one usually expects leave to be granted and in this case I do so. 19 I make the order in paragraph 1 of the notice of motion. 20 The successful plaintiffs seek an order for costs. I refuse that order. The affidavit in support of the application was demonstrably wrong in its reliance on Mizzi and that was the only specific explanation to ground the application. In my view the appropriate order is that there be no order as to costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.